U.S. Trade Deficit Lower; Record Drop in Imports

The U.S. trade deficit narrowed in September to $56.5 billion amid a record drop in imports, the Commerce Department reported Thursday. The report showed a 4.4% decline in the trade deficit from the revised August deficit of $59.1 billion. The deficit was narrower than the $47 billion expected by private forecasters. But the improvement came amid steep drops in both imports and exports, signs of weakening economic conditions both in the United States and its trading partners. Imports showed the steepest drop on record of 5.6% to $211.9 billion while exports fell by the biggest amount since September 2001, a drop of 6.1% to $155.4 billion. The politically sensitive trade gap with China, the largest U.S. trading partner, rose 9.6% to $27.8 billion as Chinese imports climbed to a record $33.1 billion. The September data highlighted weakening U.S. international trade amid the global slowdown from record peaks in July, when exports hit $168.1 billion and imports $229.4 billion. The drop in imports in September was partly due to falling oil prices and consumption. Petroleum product imports plunged 15.7% from the prior month to $37 billion. It was the smallest amount of crude oil imported -- 253.3 billion barrels -- since February 2003. Industrial supplies and materials plunged 9.9% to $65.7 billion, consumer goods dropped 7.9% to $40.1 billion, while automotive vehicles and parts were down 3.8% to $18.6 billion. Imports of capital goods rose 1.3% to $38.8 billion. Exports, which had been a crucial support of U.S. economic growth in the first six months of the year, continued to fall as the global economy faltered and the weak dollar firmed. Among goods exports, the drop was sharpest in industrial supplies and materials, down a hefty 10.9% to $33.3 billion, and capital goods, off 10% at $38.1 billion. The longstanding U.S. surplus in services trade rose 1.1% to $13.1 billion. For the first nine months of the year, the U.S. trade deficit reached $534.5 billion, up 1.5% from the same period in 2007. Copyright Agence France-Presse, 2008